Santa Maria, Brazil: Brazilian police have arrested four suspects in the wake of a nightclub fire that killed 231 and forced sports officials to defend preparations for the soccer World Cup and Olympics.

Two of the Kiss club's owners were arrested, along with a pair of musicians who starred in the ill-fated pyrotechnic show blamed for sparking the tragedy in the southern town of Santa Maria.

The inferno, described as the second worst in Brazilian history, forced the cancellation of an event to mark the run-up to the country's hosting of next year's biggest global sporting event, the soccer World Cup.

The Kiss nightclub in Santa Maria, southern Brazil, where a blaze killed more than 230 people. Photo: AFP

The fire broke out about 2am on Sunday when the club was packed with university students.

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Survivors said the band's vocalist lit a firework that may have triggered the blaze.

"We think the most plausible cause of the fire were the pyrotechnics used by the band, which released sparks and set the roof alight," Police Commissioner Sandro Meinerz said.

As distraught mourners laid wreaths outside the scene, police official Michele Vimmermann said club co-owner Elissandro Sphor and two members of the Gurizada Fandangueira band had been detained.

A second club owner, who has not been named, surrendered later in the day.

Mr Meinerz said the club had had no valid permits to operate since August and that the club's emergency exits led only to the main entrance, which became a deadly bottleneck.

Most of the victims died of smoke inhalation.

In a statement to police, Mr Sphor acknowledged the club's licence had expired, adding he had requested a renewal. He also blamed the band for the incident, according to the Globo G1 website.

The band denied they had been at fault and said one of their number, an accordionist, was among the dead.

"We want justice, we're not to blame for anything, we didn't want to lose a companion," band member Rodrigo Lemos Martins told G1.

Mr Sphor denied witness accounts he had ordered security guards to block the exit of the club and that he had removed a computer - which Mr Meinerz said had disappeared - with security camera footage from the site.

While friends and family members bid farewell to their loved ones, officials revised the death toll from 233 to 231 and said at least 100 others remained hospitalised, 80 of them in serious condition.

The deaths sent shock waves through Brazil and President Dilma Rousseff cut short a trip to Chile to rush to the scene. Authorities called off a planned event dubbed "500 Days until the World Cup".

"What happened is the most horrible thing that can happen," Jerome Valcke, secretary general of football's governing body FIFA, told reporters.

"However, it has nothing to do with the security within the stadiums," he said, ahead of the FIFA Confederations Cup to be held in Brazil June 15 to 30 and the FIFA 2014 World Cup to be staged here next year.

"We have an emergency plan in place to evacuate a full stadium within eight minutes," he added.

A spokesperson for the International Olympic Committee said: "We do not doubt that Rio 2016 will offer a secure environment for the fans, athletes and those working for the Games."